Living standards will improve in 2014
Promisingly household disposable income will rise in real terms for the first year since 2009, as rents will grow by 1.7% annually while average earnings will increase by just 2.2%.
Just 1.4% of all tenancies will face rent arrears, down from 2.3% in 2013.
The historically significant cross-over of earnings growth and rent rises will likely to take place in July, yet it could happen as soon as April if wages pick up more quickly.
David Brown, commercial director of LSL Property Services, said: “The longest recession in living memory has been banished to the history books. And this year the squeeze on living standards is finally abating too.
“Households have withstood half a decade of bombardment from weak earnings, inflation – and a general spectre of gloom. We’re still some way from the finish line, but for now things can only get better.
“The private rented sector is now powered by waves of investment from landlords and a rejuvenated financial system. Meanwhile every sector of the economy – including construction – appears to be creating jobs.”
As of January, the average earner living in privately rented accommodation has £822 per month remaining after paying tax and rent, 6% less than the peak of £874 in September 2009.
Less tenants are encountering problems with arrears, as of Q1 2014 the number of UK households owing more than two months’ rent was 35% lower than the same period last year.
Tenant arrears fell to their second lowest rate on record in December, with just 6.9% of all rent late or unpaid as of February, compared to 7.4% the previous month.
David Brown added: “Just because we’re going in the right direction, it doesn’t mean we’re already there. Landlords should stay in contact with their tenants on a regular basis.
“And in the unlikely situation that payment of rent will be late, both parties should be aware of all the options as early as possible.
“However, such a dramatic fall in the level of severe arrears means there are far fewer tenants struggling with their finances on such a fundamental basis.
“If the risk of unemployment can stay low and wages can fulfil their expected growth, tenant finances will almost certainly continue to improve as we move through 2014.”
In 2013 average earnings increased by 1.1%, while rents rose 1.6% on the same seasonally adjusted basis.
Previously rents have outpaced wages by more than twice over, as in 2012 rents rose by 3.2% annually while average regular earnings grew by just 1.3%.
The last time wages outpaced wages was four years ago, mainly due to a rapid dip in rents following the collapse of purchase prices at the time.